Oct. 29, 2009 (PR Newswire) --
IRVINE, Calif., Oct. 29, 2009 /PRNewswire-FirstCall/ -- Standard Pacific Corp. (NYSE: SPF) today announced operating results for its third quarter ended September 30, 2009. Homebuilding revenues for the 2009 third quarter were $327.4 million (including $57.5 million in land sale revenues), down 18% from $400.3 million last year. The Company generated a net loss of $23.8 million, or $0.10 per diluted share, versus a net loss of $369.9 million, or $2.54 per diluted share, for the year earlier period. The 2009 third quarter results included asset impairment charges of $7.8 million, which related primarily to the sale of a podium building and land, versus $368.4 million in impairments in the prior year period. The 2009 third quarter results also included $10.1 million in debt and other restructuring charges and a $9.3 million charge related to the deferred tax asset generated during the quarter. Excluding asset impairment and restructuring charges, the Company generated a 2009 third quarter net loss of approximately $3.6 million*, or $0.01 per diluted share.*
During the quarter, the Company generated $112.6 million of cash flows from operations, driven primarily from a $104.0 million decrease in inventories (including $56.2 million related to the sale of a podium building and land). The Company ended the quarter with $806.8 million of homebuilding cash (including $283.3 million of restricted cash, $257.6 million of which was held in escrow related to the issuance of $280 million of 10¾% senior notes due 2016). On October 9, 2009, the Company completed a refinancing transaction pursuant to which it utilized the $257.6 million of net proceeds from the issuance of the 10¾% senior notes due 2016 and cash on hand to repurchase approximately $133.4 million, $122.0 million and $3.4 million of senior notes due 2010, 2011 and 2013, respectively. The Company also exchanged $32.8 million of its 2012 senior subordinated convertible notes during the quarter for approximately 7.6 million shares of common stock at an effective price of $4.30 per share. Finally, the Company repaid the remaining $37.1 million balance on its Term Loan A credit facility, the $22.9 million balance on its revolving credit facility, $51.3 million of other indebtedness and assumed $52.1 million of joint venture recourse debt during the quarter. In connection with these financing transactions, the Company recorded an $8.8 million non-cash loss on the early extinguishment of debt.
As a result of these transactions, the Company reduced the amount of senior notes, revolving credit facility and Term Loan A indebtedness that was scheduled to mature before 2013 from $528 million to $180 million ($15 million in 2010, $49 million in 2011 and $116 million in 2012). Since just prior to the closing of the MatlinPatterson transaction in June 2008, the Company has reduced the principal amount of its total homebuilding and joint venture recourse debt by over $725 million from $2.0 billion to $1.27 billion and has reduced the amount of homebuilding and joint venture recourse debt maturing prior to 2013 from $1.33 billion to $322 million (including $180 million of senior notes, $97 million of project specific debt and $45 million of joint venture recourse debt related to three joint ventures).
Ken Campbell, the Company's President and CEO stated, "With over $500 million of cash in the bank, anticipated near-term positive cash flows from operations and the significant reduction in the amount of our debt that is scheduled to mature in the next three years, we believe we have ample liquidity to acquire land assets to support our growth when the upturn in the housing market occurs."
Mr. Campbell continued, "Holding our gross margins at 18% and our SG&A rate at 15% during the quarter is not great performance, but gives a good indication of the margins built into our inventory and positions us reasonably well for significant improvements in profitability with only small improvements in the housing market."
Homebuilding Operations
The Company generated a homebuilding pretax loss for the 2009 third quarter of $24.8 million compared to a pretax loss of $389.4 million in the year earlier period. The Company's homebuilding pretax loss for the 2009 third quarter included $7.8 million of asset impairment charges, $8.8 million of loss on early extinguishment of debt and $1.6 million in restructuring charges. The decrease in pretax loss was primarily the result of a $360.5 million decrease in impairment charges and a $33.2 million decrease in the Company's SG&A expenses. These changes were partially offset by a $9.3 million reduction in gross margin (excluding impairments), an $8.7 million increase in non-capitalized interest expense and a $7.0 million increase in loss on early extinguishment of debt.
Homebuilding revenues decreased 18% to $327.4 million during the 2009 third quarter primarily due to a 25% decrease in new home deliveries to 893 homes and a 9% decline in consolidated average home price to $302,000. These decreases were offset in part by a $52.1 million increase in land sale revenues in the 2009 third quarter. The Company's average home price was flat with the 2009 second quarter at $302,000 and was slightly positive on a same community basis.
The Company's homebuilding gross margin (including land sales) for the 2009 third quarter was 13.0% compared to a negative 51.9% in the prior year period. The 2009 third quarter gross margin included $7.7 million in inventory impairment charges, which were included in cost of land sales and related to the sale of a podium building in Southern California and a land sale in Florida. Excluding land sales and the related inventory impairment charges, the Company's 2009 third quarter gross margin from home sales would have been 18.6%* versus 14.1%* for the 2008 third quarter. The 450 basis point increase in the year-over-year adjusted gross margin was driven primarily by higher margins in California and lower direct construction costs as a result of value engineering and the rebidding of contracts.
The Company's 2009 third quarter selling, general and administrative ("SG&A") expenses (including Corporate G&A) decreased $33.2 million, or 43%, from the year earlier period resulting in an SG&A rate of 13.3% versus 19.2% in the prior year period. The Company's 2009 third quarter results included approximately $1.5 million in homebuilding restructuring charges related to severance and lease terminations, all of which was included in the Company's SG&A expenses. Excluding land sale revenues and restructuring charges, the Company's 2009 third quarter SG&A rate was 15.6%* versus 18.7%* for the 2008 third quarter despite a 32% decrease in home sale revenues.
Net new orders (excluding joint ventures and discontinued operations) for the 2009 third quarter decreased 3% from the 2008 third quarter to 893 new homes on a 28% decrease in the number of average active selling communities from the prior year period from 186 to 134. The Company's cancellation rate for the three months ended September 30, 2009 was 15%, down from 16% for the 2009 second quarter and 26% for the 2008 third quarter. The Company's monthly sales absorption rate for the 2009 third quarter was 2.2 per community, up from the prior year third quarter rate of 1.7 per community, but down from 2.7 per community for the 2009 second quarter. The improvement in the Company's sales absorption rate during the quarter as compared to the 2008 third quarter was due to increases in most of its markets on a per community basis with absorption rates relatively better in California, Arizona and Florida.
The dollar value of the Company's backlog (excluding joint ventures) decreased 17% to $329.7 million, or 995 homes, as compared to the 2008 third quarter value, but was up 7% from the 2009 second quarter backlog value.
Earnings Conference Call
A conference call to discuss the Company's 2009 third quarter will be held at 1:00 p.m. Eastern Time Friday, October 30, 2009. The call will be broadcast live over the Internet and can be accessed through the Company's website at http://standardpacifichomes.com/ir. The call will also be accessible via telephone by dialing (888) 213-3752 (domestic) or (913) 981-5510 (international); Passcode: 5369884. The entire audio transmission with the synchronized slide presentation will be available on our website for replay within 2 to 3 hours following the live broadcast, and can be accessed by dialing (888) 203-1112 (domestic) or (719) 457-0820 (international); Passcode: 5369884.
About Standard Pacific
Standard Pacific, one of the nation's largest homebuilders, has built more than 108,000 homes during its 43-year history. The Company constructs homes within a wide range of price and size targeting a broad range of homebuyers. Standard Pacific operates in many of the largest housing markets in the country with operations in major metropolitan areas in California, Florida, Arizona, the Carolinas, Texas, Colorado and Nevada. The Company provides mortgage financing and title services to its homebuyers through Standard Pacific Mortgage and SPH Title. For more information about the Company and its new home developments, please visit our website at: www.standardpacifichomes.com.
This news release contains forward-looking statements. These statements include but are not limited to statements regarding: trends in new home orders, deliveries, average home price and backlog; anticipated cash flows and future profitability; the sufficiency of our liquidity to support growth; and the future condition of the housing market. Forward-looking statements are based on our current expectations or beliefs regarding future events or circumstances, and you should not place undue reliance on these statements. Such statements involve known and unknown risks, uncertainties, assumptions and other factors many of which are out of the Company's control and difficult to forecast that may cause actual results to differ materially from those that may be described or implied. Such factors include but are not limited to: local and general economic and market conditions, including consumer confidence, employment rates, interest rates, the cost and availability of mortgage financing, and stock market, home and land valuations; the impact on economic conditions of terrorist attacks or the outbreak or escalation of armed conflict involving the United States; the cost and availability of suitable undeveloped land, building materials and labor; the cost and availability of construction financing and corporate debt and equity capital; our significant amount of debt and the impact of restrictive covenants in our credit agreements, public notes, and private term loans and our ability to comply with their covenants and repay such debt as it comes due; a negative change in our credit rating or outlook; the demand for and affordability of single-family homes; the supply of housing for sale; cancellations of purchase contracts by homebuyers; the cyclical and competitive nature of the Company's business; governmental regulation, including the impact of "slow growth" or similar initiatives; delays in the land entitlement process, development, construction, or the opening of new home communities; adverse weather conditions and natural disasters; environmental matters; risks relating to the Company's mortgage banking operations; future business decisions and the Company's ability to successfully implement the Company's operational and other strategies; litigation and warranty claims; and other risks discussed in the Company's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended Dec. 31, 2008 and subsequent Quarterly Reports on Form 10-Q. The Company assumes no, and hereby disclaims any, obligation to update any of the foregoing or any other forward-looking statements. The Company nonetheless reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this press release.
